Competition law in the UK is currently enforced by the Competition and Markets Authority (and, until the end of 2020, by the European Commission). But the CMA also works alongside a host of other regulators which cover specific sectors – Ofgem in energy, Ofcom for telecoms and post, Ofwat for water services (in England), and the Office of Rail and Road (which does what it says on the tin), to name but a few. Those sectoral regulators enjoy "concurrent" jurisdiction with the CMA on competition law matters, meaning they also have the power to enforce competition laws within their sectors.
That may all soon change. The UK Government recently announced that John Penrose MP would lead a review of the UK's competition policy. Mr Penrose has for some time campaigned for changes to the current competition regime, so at least some sort of recommendation for change seems almost inevitable.
In his 2018 paper "A Shining City Upon a Hill" Mr Penrose identified a number of issues with current UK competition laws and the enforcement environment.
Amongst the recommendations of that paper was that, rather than viewing historically nationalised industries such as energy companies through a historical lens, the system should differentiate between the competitive and potentially competitive parts of those industries, and the network monopoly parts.
Put another way, why should Ofgem regulate competition between energy suppliers? In 2020 it is (or at least in theory should be) as easy to change your energy supplier as your preferred supermarket, so competition between suppliers should be supervised in the same way, by the CMA.
OfNet
Meanwhile, the "network" bits of the energy sector (national and local distribution networks and gas pipelines) can be regulated by a new Office for Network Regulation ("OfNet"), together with the network bits of other sectors, such as communications networks, water pipes and railway lines. The thinking is that, since networks generally have similar considerations – regarding cost of capital, fair and equal access and so on – they can be more efficient by sharing the same competition economists and lawyers, bringing in experts on specific sectors when they need them.
That would leave shrunk-down regulators to focus on the other parts of their current jurisdictions – Ofcom on regulating broadcast content and the Civil Aviation Authority on air safety, for example.
Mr Penrose's plan would involve drawing up OfNet's jurisdiction in such a way as to allow the new body to supervise new and emerging network monopolies (Google's Android operating system, for example), should Parliament decide to identify those for regulation.
Lessons learned from regulating one network could be applied to the regulation of other networks, including to those new networks as they emerge. He suggests that an overarching network regulator would be more immune from the type of "producer capture" that can result from, amongst other things, the phenomenon of poachers-turned-gamekeepers (and vice versa) that sees specialists move back and forth between a sector-focused regulator and the sector it regulates. At the same time, his paper suggests that an overarching regulator would also be less likely to develop more intrusive regulatory measures than would sectoral regulators, who might go looking for things to do even when 'their' sector does not particularly need intervention.
Whether this will be Mr Penrose's top recommendation for improving outcomes for consumers remains to be seen, and with his report requested to be "short", Parliamentary time limited, and the CMA already gearing up to take sole control of UK competition regulation once the European Commission's jurisdiction in the UK ends at the end of the year, as well as to take on the roles of UK internal market and possibly also State aid watchdog, any proposal Mr Penrose does not identify as a priority may face difficulty being actioned.
The report is due by the end of 2020.
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